People earn a living by working. They make money that enables them to live the way they want. They can manage their earnings in various ways and provide a safe financial future for themselves and their loved ones. Yet, some unforeseen situations may jeopardize their monthly income, such as illness or dismissal.
At some point, there may be a period when you are completely out of earnings. That’s especially stressful if you are supporting a family. So you spend the money you have saved or rely on the help of others, but even that cannot last you forever. If your recovery takes time or you can’t find a job, you could get into debt that can further complicate your life.
To avoid these unpleasant situations, you have to think in advance and consider income protection. That can be a great hedge against financial uncertainty if you need some time off due to an illness, injury, or job loss. Without it, you’ll face severe financial risk, and your recovery could be a long, slow, and stressful process. Aside from the mental stress that this can cause, there are many other reasons to protect your earnings.
On the source below, find a wealth of information on the importance of protecting your income:
Secure Your Family
One of the main reasons to protect income is that long periods of not working can seriously disrupt your financial circumstances. A lack of money can make your family unstable. So, income protection insurance is an important way to avoid a financial crisis and stay afloat in your family.
If you work for yourself or a contract company, you may not receive sick pay, which can leave you with no means to pay your bills. If you have kids or dependents, you may find that missing earnings is a big burden. In such a situation, income protection can help to minimize the financial impact of your absence.
Suppose you are prevented from working due to illness or injury, and you are not entitled to sick leave. In that case, the cost of treatment can significantly burden your family budget. A good health plan and income protection will bring you peace of mind. You know that your loved ones will have at least one less worry if something happens to you.
Safety Net for Redundancy
If you work on a contract or are engaged in projects, there is always a chance to get fired, even though you may not have deserved it. That rarely happens without prior notice, but again, it’s not pleasant to know that you won’t have earnings for a while. You can be unemployed for a few days, but that unfavorable period could last for months.
These are not rare situations, so you have to protect yourself in case of redundancy. The main purpose of income protection is to provide financial security when you lose your job for any reason you can’t influence. So make sure that your policy covers income loss in case of termination of employment.
Income protection can help you ease the pressure on your bills and mortgage. It will keep you from worrying about making ends meet until you put yourself together and find new employment. And when you are carefree about the money, you can focus on finding a new job or improving your working skills to increase your chances for success.
Another reason to protect income is to avoid debts. When you don’t work for a month or two and have no or low income, your savings would probably be enough for living and paying bills. But if the period of being out of the workplace prolongs, you might experience difficulties due to lack of money. Unpaid bills pile up, and the mortgage payment is difficult to make.
A good income protection policy will ease the pressure of managing bills and all other expenses. You will not have to borrow money. The amount you will receive as a monthly deduction will be a good safety net, at least for the period until you are ready to work or find a new job.
Focus on Recovery
Many things can take you away from work. These can be various illnesses, injuries, psychological trauma, or unfavorable circumstances that happen in your private life. Each of these situations is difficult and stressful, so you need time, energy, and money to overcome them.
For example, long-term sickness can be expensive. Financial stress is one of the worst things you can deal with when you’re recovering. That’s why many people decide to return to work before they’re ready, thus making things even worse. But if you are secured with a good income protection policy, you can breathe easy and focus on recovering.
Keep the Quality of Life
One of the options to get over the income loss more quickly is to adjust your lifestyle to your new financial situation. You will have to renounce restaurant dining, night outs, gym classes, and other things that are not living essentials. The goal is not to waste money until you find a new source of income.
But if you ask several agents for a quote and find a suitable income protection on time, you wouldn’t have to give up any of these. This insurance will allow you to maintain your current standard of living. You’ll be guaranteed a regular income if you’re unable to work, regardless of the reason. Even if you’re self-employed, you can still arrange a policy.
It will also give your family peace of mind. There’s no need to drop your daughter out of ballet classes or deny your son baseball training with a guaranteed premium. You can move on with your life and focus on more important things, like feeling better or getting a new job.
Besides paying your mortgage, income protection also provides you with a tax-free monthly benefit. If you pay premiums to this policy, you can claim tax relief by sending the necessary documentation to the tax office. According to the law, that’s possible if your yearly premiums don’t exceed one-tenth of your income. You’re eligible for this option if you pay all your taxes and have no claims in this regard (for example, for late payment).
You can never be sure what can happen and prevent you from working. So having income protection is a wise move. If you’re still unsure about this policy, it’s worth discussing it with insurance agents. They can answer your questions and help you decide which policy is best for you. With proper coverage, you’ll enjoy peace of mind and be more focused on getting your life back to order.